The Good, The Bad, And The Ugly Of Congress’s Latest Coronavirus Spending Bill

Republicans and Democrats finally stopped squabbling long enough to spend an estimated $2 trillion on what they claim is emergency coronavirus relief. Here’s the good, the bad, and the ugly of the bill.

Employer-side payroll tax payments are suspended through the end of the year, to be paid half by year-end 2021 and half by year-end 2022. This will increase business liquidity by about $700 billion.

While I would have preferred a cut to a deferral, this will significantly lessen the near-term tax burden on business payrolls, encouraging businesses to retain and restore jobs. (Treasury has already announced a deferral of corporate income taxes under existing authorities.)

The Federal Reserve’s new lending facility is funded with up to $425 billion, which will be levered to provide up to $4 trillion in liquidity to distressed businesses.

Five-year carryback for tax years 2018, 2019, and 2020, for corporations and pass-through businesses as well. This will allow this year large expected losses to be carried back for substantial refunds.

Fixes the so-called “retail glitch” for qualified investment property (QIP), allowing investments in QIP improvement to commercial buildings—flooring, lighting, fixtures, etc.—to qualify for bonus depreciation. The glitch forced a 39-year recovery for such investments, and fixing it has been a top priority of restaurants and retailers.

Distillers were made exempt from alcohol excise taxes for the alcohol used to produce hand sanitizer.

This solves the biggest flaw in last week’s Nancy Pelosi-Steven Mnuchin bill, which mandates paid sick leave and required businesses to pay the costs up front and be reimbursed months later, even though they are already in a severe cash crunch.

This repeats and worsens the principal policy error of the Obama recession: enhanced unemployment benefits that undercut work incentives, contract the active labor force, and undermine economic growth.

Even worse, this bill for the first time provides unemployment benefits for a worker who quits if he or she self-certifies that “the individual has to quit his or her job as a direct result of COVID-19.”

Four months exceeds any reasonable expectation of how long shutdown orders will be in place, and will disincentivize a significant portion of the workforce from returning to work before the extended benefits end.

This is a huge giveaway to union bosses by the backdoor. Medium-sized businesses (500-10,000 employees) cannot oppose any union organizing campaign for the duration of a federal loan.

Employer-paid student loan payments are made tax-exempt, creating a tax preference for student loan payments over ordinary income. This is a down payment on a Democratic political agenda item, rewarding principally upper-middle-class professionals who chose to take on the long-term obligation of student loans.

Senate Minority Leader Chuck Schumer stripped out the funding for Strategic Petroleum Reserve purchases. Hard to see why we wouldn’t want to top it up at 20 bucks a gallon. Probably just to spite the president.

The economy remains substantially shut down, and no matter how much stimulus money is pushed out, it is impossible to buy products and services that nobody is producing. The severity of the present policy-induced contraction will depend on how rapidly a significant portion of the workforce can return to work.

via thefederalist

8 comments

  1. What you do not under stand is they democratic play book is the communist manafestal. You have to destroy they economy and enslave the citizens to take over the country. They been working at it for years while the people sat back fat dumb and happy.

  2. Maybe true Paul obama wasn’t a help either , and his sidekicks , dismantling America , catering to Iran why ? I’m sure he received big bucks from the billions he gave them , our tax dollars ! Destroying our military , taking money from Medica for Obamacare , what a failure ! His moronic apology tour. Letting terrorists from gitmo go free . Birdough a deserter freed , all that criminal activity hillary has committed. But this takes the Cake the Chinese virus relief package , stalling , hurting Americans more than need to .

  3. With all the crap the country has been through since Trump’s election in 2016, you know darn well the demonrats had a scenario like this ‘pandemic shut-down’ already planned out. There is no way anyone can convince me it isn’t a conspiracy. Part of that lends itself to the notion the CIA may have even planted the virus; but with the demonrat loyalties to Imperial China, THAT’S hard to imagine.

    It’s been one major catastrophe after another since 2016, all fueled by the demonrat and RINO hate for a duly-elected president. Their applecart was turned over, and their milk was spilled. They’ve been crying about it since. Trump took their Washington money machine away; he stopped their income franchises.
    They did promise to “make Trump supporters pay” dearly for electing him. They will do ANYTHING to regain power. They’ve whipped up their welfare base by convincing them Trump will take away all the perversions Obama gave them, and they’ve paid dummy-crats to riot and damage property. They issue mandates for their media acolytes to spin and repeat.

    It is martial law under guise of ‘pandemic’.

    Pill-osi and Cryin’ Chuckie have hurt more than their base with their disgusting activities on this virus relief bill. Hopefully people will remember this event in our history, and wonder or at least think before they go into the voting booth. Maybe the major demons will lose their next election.

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